THIS
STOCKHOLDERS’ AGREEMENT (the “Agreement” )
is made and entered into effective as of the 10
th day of February, 2004, by and among CROSMAN
ACQUISITION CORPORATION, a Delaware corporation (the
“Company” ), COMPASS CROSMAN PARTNERS, L.P., a
Bahamian limited partnership ( “Compass” ),
NORWEST MEZZANINE PARTNERS I, LP, a Minnesota limited partnership (
“Norwest” ), KEN D’ARCY, an individual (
“D’Arcy” ), STEVE UPHAM, an individual (
“Upham” ), DAN SCHULTZ, an individual (
“Schultz” ), ROBERT BECKWITH, an individual (
“Beckwith” ), and each additional holder (if
any) of Shares (as defined herein) signing an Additional Holder
Signature Page in the form attached as Exhibit A hereto
(each, a “New Holder” and, collectively, the
“New Holders” ). D’Arcy, Upham, Schultz
and Beckwith are sometimes referred to herein as the
“Management Stockholders” . Compass, Norwest,
the Management Stockholders and the New Holders (if any) are
sometimes referred to herein individually as a
“Stockholder” and collectively as the
“Stockholders” .
The following
recitals are representations of the parties hereto with respect to
certain factual matters that form the basis of this Agreement and
are an integral part of this Agreement:
A. The
Company is authorized to issue one million five hundred thousand
(1,500,000) shares of Common Stock, par value $0.01 per share
(collectively, the “Shares” ), 558,473 of which
are currently issued and outstanding (the “Outstanding
Shares” ).
B. The
Company may hereafter authorize the issuance of and/or issue up to
75,000 Shares to its directors and certain designated employees
pursuant to the terms of one or more stock option plans and/or
stock option agreements and any related buy/sell agreements
(collectively, the “Stock Options” ).
C. The
Company, Compass, Norwest, the Management Stockholders and certain
other persons named therein are parties to that certain Stock
Purchase and Redemption Agreement of even date herewith (the
“Stock Purchase Agreement” ), pursuant to which
Compass purchased from certain stockholders 440,310 Shares, and
Norwest purchased 77,909 Shares.
D. The
Company, Crosman Corporation, a Delaware corporation and a wholly
owned subsidiary of the Company ( “Crosman” ),
and Norwest, as Purchaser, are parties to a certain Subordinated
Note Purchase Agreement of even date herewith (the “Note
Purchase Agreement” ), pursuant to which Norwest has,
among other things, agreed to purchase certain Notes (as defined
therein) in the original principal amount of $14,000,000 from
Crosman (the “Notes” ).
E. The
Company and the Stockholders desire to set forth their agreement
with respect to ownership of Shares and establish consistent
policies with respect to the management of the Company and the
transfer of Shares.
In consideration
of the forgoing Recitals and the mutual promises contained in this
Agreement and other good and valuable consideration, the adequacy,
sufficiency and receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1
— GENERAL RESTRICTION ON TRANSFER
In order to assure
the Company and the Stockholders the benefit of this Agreement, no
Stockholder shall sell, exchange, give, transfer, assign, pledge,
encumber, hypothecate or otherwise dispose (
“transfer” ) of any Shares or any legal,
beneficial or other interest in any Shares (including, without
limitation, transfers by way of intestacy, will, gift, bankruptcy,
execution, seizure and sale by legal process, by operation of law
or otherwise) except as expressly provided in this
Agreement.
SECTION 2
— PERMITTED TRANSFERS
(a) Without
first complying with the provisions of Section 3 ,
below, and subject to the provisions of the Stock Options, the
Stockholders may transfer legal and/or beneficial ownership of
Shares only (i) in an Open Market Transaction (as defined
below), (ii) pursuant to Section 4 hereof,
(iii) pursuant to Section 5 hereof (provided that
Compass shall be required to comply with Section 3
prior to offering the Tag-Along Rights set forth in said
Section 5 ), or (iv)(A) among themselves, (B) to
any Affiliate (defined below) of Compass or Norwest, and/or
(C) in the case of a Management Stockholder, to such
Management Stockholder’s spouse, lineal descendants or trusts
for the benefit of any of them or any partnership, corporation or
other entity that is and remains owned or controlled by them;
provided that the transferring Management Stockholder shall retain
voting control over the Shares transferred through a voting trust
or similar arrangement (each transferee described in any of clauses
(iv)(A), (B) or (C), a “Permitted
Transferee” ). Any Shares transferred by a Stockholder to
a Permitted Transferee shall remain subject to the provisions of
this Agreement. Notwithstanding anything in this Agreement to the
contrary, however, if any term or provision contained in this
Agreement relating to the rights and/or obligations of Stockholders
to transfer Shares shall be inconsistent with any term or provision
contained in the Stock Options, the terms of the Stock Options, as
applicable, shall control.
(b) As used
in this Agreement, “Affiliate” of a Person shall
mean any other Person directly or indirectly controlling, under
common control with, or controlled by such Person. An Affiliate of
any Person shall include any officer, director, manager, employee
or (direct or indirect) record or beneficial owner of any equity
interest in such Person. For purposes of the definition of
Affiliate, “control” when used with respect to
any specific Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and
the terms “controlling” and
“controlled” have meanings relative to the
foregoing. As used herein, “Person” shall mean
any individual, sole proprietorship, or other entity of any kind or
nature including without limitation any corporation, partnership,
trust, unincorporated organization, limited liability company,
mutual company, joint stock company, estate, union, employee
organization, government or any agency or political subdivision
thereof.
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(c) As used
in this Section 2 , the term “Open Market
Transaction” means the sale of Shares in an open market
transaction at such time as there exists a bona fide public market
for such Shares, such transaction including, without limitation a
sale pursuant to a registration statement filed under the
Securities Act of 1933, as amended (the “Securities
Act” ), or pursuant to Rule 144 (or any successor
rule, which shall not include Rule 144A) under such Securities
Act.
(d) Except as
expressly permitted in Section 2(f) below, nothing in
this Section 2 shall be deemed to permit the Company to
repurchase any of its Shares from a Management Stockholder or any
other Stockholder. If the Company desires to effect any such
purchase, it shall send notice to all of the Stockholders
describing (i) the Stockholder from whom it desires to make
such repurchase and, if applicable, the event giving rise to the
request to make such repurchase, (ii) the number of Shares
which are the subject of the repurchase, (iii) the proposed
repurchase price and (iv) the fair market value of the subject
Shares as determined by the Company’s Board of Directors in
its sole discretion. Each of Compass and Norwest shall have the
right to consent or withhold its consent to such repurchase in its
sole discretion.
(e) Notwithstanding
any provision of this Agreement to the contrary, without first
complying with the provisions of Section 3 , below, and
without obtaining the consent of Norwest or any other Stockholder,
Compass shall be permitted to sell and transfer up to an aggregate
of 30,000 Shares to directors, officers and employees of the
Company or any subsidiary thereof; provided that in the case of a
sale to officers or employees of the Company or any subsidiary of
the Company, such sale is made with in 90 days of the date
hereof.
(f) Notwithstanding
any provision of this Agreement to the contrary, without first
complying with the provisions of Section 3 , below, and
without obtaining the consent of Norwest or any other Stockholder,
the Company, Compass and/or Norwest, in their sole discretion,
shall be permitted to purchase from any Management Stockholder, or
any other director, officer or employee of the Company or any
subsidiary thereof, upon termination of employment (in the case of
an officer or employee), or upon such person ceasing to be a
director, any Shares sold to such individual on or before the date
hereof or pursuant to the provisions of Section 2(e) hereof;
provided, however, that in no event shall the Company purchase any
such Shares at a price greater than the fair market value of such
Shares on the date of such purchase, as determined by the
Company’s Board of Directors.
(g) As
security for the payment and performance of each New Holder’s
obligations under this Agreement, such New Holder hereby pledges
and grants to the Company a security interest in all of such New
Holder’s rights, title and interest in, to and under all of
its Shares, the stock certificates evidencing the same and all
dividends, distributions and other proceeds therefrom. In order to
perfect such security interest, upon the request of the Company or
Compass from time to time, each New Holder shall promptly deliver
to the Company all stock certificates evidencing the Shares of such
new Holder, together with a stock power executed in blank in a form
acceptable to the Company and its counsel. Upon a breach of any
covenant or agreement of such New Holder under this Agreement and
the failure of such New Holder to cure the same within five
(5) days after receipt of written notice thereof from the
Company or
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Compass, the
Company shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code as adopted in the State of
Delaware.
SECTION 3
— RIGHTS OF FIRST REFUSAL
(a)
Company’s Right . If a Stockholder or any
Permitted Transferee (a “Selling Stockholder” )
desires to dispose of all or any part of the Shares owned by such
Selling Stockholder ( “Offered Shares” ) in a
privately-negotiated transaction pursuant to a bona fide
offer (the “Offer” ) from a person or entity
other than a Permitted Transferee, then:
(i) The Selling
Stockholder first shall offer in writing to sell all of the Offered
Shares to the Company on the same terms as set forth in the Offer,
and remit written notice to the Company of the material terms of
the Offer (the “Offered Terms” ); and
(ii) The Company
may elect to purchase all of the Offered Shares on the Offered
Terms by providing written notice to the Selling Stockholder within
thirty (30) days after receiving the notice of offer,
otherwise the offer will be deemed declined by the Company. The
determination by the Company shall be made by a majority of the
directors, excluding the Selling Stockholder (if such Selling
Stockholder is a director).
(b)
Compass’ Right . If the Company does not elect to
purchase the Offered Shares within the applicable time period, the
Selling Stockholder next shall (i) offer in writing to sell
all of the Offered Shares to Compass and (ii) remit written
notice to Compass of the Offered Terms. Compass may elect to
purchase the Offered Shares on the Offered Terms by providing
written notice to the Selling Stockholder within twenty
(20) days after receipt of the notice of offer, otherwise the
offer will be deemed declined by Compass. If Compass elects to
purchase all or part of the Offered Shares, then the Selling
Stockholder shall sell such number of Offered Shares with respect
to which Compass exercised such option to Compass in accordance
with the provisions of this Section 3 .
(c)
Other Stockholders’ Rights . If Compass elects to
purchase all of the Offered Shares, then the remaining Stockholders
shall not have the option or right to purchase any of the Offered
Shares. However, if Compass elects not to purchase any of the
Offered Shares or to purchase less than all of the Offered Shares,
then the Selling Stockholder shall (i) offer in writing to
sell the Offered Shares not purchased by Compass (the
“ROFR Shares” ) to the remaining Stockholders as
provided below and (ii) remit written notice to such
Stockholders of the Offered Terms. Each such Stockholder may elect
to purchase ROFR Shares on the Offered Terms by providing written
notice to the Selling Stockholder within twenty (20) days
after receipt of the notice of offer, otherwise the offer will be
deemed declined by such Stockholder. If more than one such
Stockholder elects to purchase ROFR Shares, then each such
Stockholder shall have the right to purchase only that proportion
of the ROFR Shares which the number of Shares then owned by such
Stockholder bears to the total number of Shares then held by all of
the Stockholders which exercised their purchase options
hereunder.
(d)
Requirements for Sale . Notwithstanding anything herein
to the contrary, a Selling Stockholder shall not be required to
sell any Offered Shares to the Company, Compass or
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the other
Stockholders hereunder unless the Company, Compass and the other
Stockholders, together, purchase all but not less than all of such
Offered Shares.
(e)
Closing Date . If the Company, Compass or any other
Stockholders elect to purchase all of the Offered Shares on the
Offered Terms in accordance with the provisions of this
Section 3 , then the transaction(s) contemplated by
this Section 3 shall be consummated and payment made in
accordance with the Offered Terms on the date which is the later
of: (i) the date specified in the offer; or (ii) thirty
(30) days after the Company, Compass or the other
Stockholders, as the case may be, exercise their option to purchase
the Offered Shares.
(f)
Sale to Original Offeror; Renewal of Right of First Refusal
. If the Company, Compass and the other Stockholders together
do not elect to purchase all of the Offered Shares within the time
period specified in paragraph (a), (b) or (c), as applicable,
of this Section 3 , then the Selling Stockholder may sell
such Offered Shares to the person or entity making the Offer if,
but only if: (i) the sale of the Offered Shares is consummated
within sixty (60) days following the last day on which Compass
or the other Stockholders could exercise their respective rights to
purchase the Offered Shares; and (ii) the Company shall have
received an original Additional Holder Signature Page in the form
attached as Exhibit A hereto executed by the purchaser
of the Offered Shares. If the Selling Stockholder fails to sell the
Offered Shares in accordance with this paragraph, then the
provisions of this Section 3 shall automatically renew
and the Selling Stockholder must again comply with all of the
requirements contained in this Section 3 .
(g)
Effect of Change in Offered Terms . Each time the
Offered Terms are altered in any fashion, including, but not
limited to, changes in the proposed purchaser or the consideration
to be paid or manner of payment, then the provisions of this
Section 3 shall automatically renew as if a totally new
transaction were proposed.
SECTION 4
— DRAG-ALONG RIGHTS
(a) Notwithstanding
the provisions of Section 3 , above, but subject to the
following provisions of this Section 4 , if at any time
following the date hereof, a majority of the Company’s Board
of Directors and holders of a majority of the voting rights with
respect to the Shares then outstanding (voting as a single class)
(the “Majority Stockholders” ) shall vote or
otherwise enter into an agreement to (A) sell in a bona
fide arms’ length transaction all of the Shares owned by
the Majority Stockholders to any independent third party, person or
group of persons who are not affiliated with the Majority
Stockholders (an “Outsider” ), or (B) an
agreement to enter into a bona fide arms’ length
transaction pursuant to which the Company agrees to merge with or
into another entity or agrees to sell all or substantially all of
the assets of the Company to another independent, third party
entity that is not affiliated with the Majority Stockholders (in
each case, a “Corporate Transaction” ), then the
Majority Stockholders may require that each Stockholder sell all of
the Shares owned by such Stockholder to such independent third
party, person or group of persons at the same price per share and
on the same terms and conditions as are applicable to the proposed
sale by such Majority Stockholders and/or vote such securities in
favor of the Corporate Transaction. Each Stockholder hereby grants
to Compass or its designee an irrevocable proxy, coupled with an
interest, to vote all shares of capital stock owned by the
Stockholder and to take such other actions to the extent necessary
to
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carry out the
provisions of this Section 4 in the event of any breach
by the Stockholder of its obligations hereunder.
(b) In order
to exercise the rights under this Section 4 , the
Majority Stockholders must give notice to each Stockholder (other
than the Majority Stoc
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